Usio(USIO) - 2025 Q2 - Quarterly Results

Executive Summary This section provides an overview of Usio's Q2 2025 financial and operational performance, highlighting key achievements and strategic directions Q2 2025 Performance Highlights Usio reported a 15% increase in total payment dollars processed and expanded gross margins for Q2 2025, achieving its seventh consecutive quarter of positive Adjusted EBITDA despite a net loss of $0.4 million - Total payment dollars processed through all payment channels increased 15% versus the prior year period[1] - Gross margin expanded, marking the seventh consecutive quarter of positive Adjusted EBITDA[1] Q2 2025 Key Financial Highlights | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change | Source | | :--------------------- | :------ | :------ | :----- | :----- | | Net Loss | ($0.4M) | $0.1M | Down | [4] | | Adjusted EBITDA | $0.5M | $0.8M | Down | [4] | CEO Commentary and Strategic Initiatives CEO Louis Hoch highlighted improvements across strategic objectives, including strong processing growth, positive operating cash flow, and expanded margins, while implementing a new 'Usio One' go-to-market strategy and investing in new technologies - The company is implementing a new 'Usio One' go-to-market strategy, reducing costs, improving efficiency, and investing in new technologies such as wearables and biometric payment systems[2] - More new programs are in implementation across all businesses than at any time in the company's history[2] - A new enterprise customer in the card business has the potential to consistently generate over $100 million in annual recurring processing volume[5] Operational Performance Review This section details Usio's processing and transaction volumes, along with segment-specific performance trends for Q2 2025 Overall Processing and Transaction Volumes In the second quarter of 2025, Usio experienced significant growth in overall processing volumes, with total payment transactions increasing by 26% and total payment dollars processed rising by 15% year-over-year Q2 2025 Processing Volumes | Metric | Q2 2025 | Q2 2024 | Change | Source | | :-------------------------- | :-------- | :-------- | :----- | :----- | | Total Payment Transactions (M) | 14.1M | N/A | +26% | [6] | | Total Payment Dollars Processed (B) | $1.94B | $1.68B | +15% | [6] | Segment-Specific Processing Trends Usio's ACH and PINless debit services showed strong growth in Q2 2025, while credit card processing volumes also increased, despite significant declines in the prepaid card business Q2 2025 Segment Processing Volume Changes (YoY) | Segment | Metric | Change | Source | | :-------------------- | :-------------------- | :----- | :----- | | ACH Electronic Check | Dollar Volume | +19% | [2, 7] | | ACH Electronic Check | Transactions | +33% | [2, 7] | | ACH Returned Check | Transactions | +32% | [2, 7] | | PINless Debit | Transactions | +144% | [2] | | PINless Debit | Dollars Processed | +93% | [2] | | Credit Card | Dollars Processed | +9% | [7] | | Credit Card | Transactions Processed | +69% | [7] | | Prepaid Card | Card Load Volume | -51% | [7] | | Prepaid Card | Transactions Processed | -37% | [7] | | Prepaid Card | Purchase Volume | -23% | [7] | | Output Solutions | Mail Pieces Processed | +3% | [7] | | Output Solutions | Electronic Documents Processed | -3% | [7] | Financial Performance This section provides a detailed analysis of Usio's financial results for Q2 and H1 2025, covering revenues, profits, expenses, and cash flows Second Quarter 2025 Financial Results Usio's Q2 2025 consolidated revenues saw a slight decline, primarily due to the prepaid card services business, though this was largely offset by strong growth in ACH and complementary services, leading to an operating loss and a net loss despite expanded gross margins Revenue Breakdown This subsection details Usio's revenue performance across its various business segments for Q2 2025 Q2 2025 Revenue by Segment | Segment | Q2 2025 Revenue (USD) | Q2 2024 Revenue (USD) | $ Change (USD) | % Change | Source | | :-------------------------------- | :-------------- | :-------------- | :------- | :------- | :----- | | ACH and complementary services | $5,192,224 | $3,894,330 | $1,297,894 | 33% | [9] | | Credit card | $7,045,030 | $7,261,268 | ($216,238) | (3)% | [9] | | Prepaid card services | $2,726,410 | $3,673,418 | ($947,008) | (26)% | [9] | | Output Solutions | $4,642,901 | $4,686,869 | ($43,968) | (1)% | [9] | | Total Revenue | $19,960,990 | $20,079,888 | ($118,898) | (1)% | [9] | Gross Profit and Margins This subsection presents Usio's gross profit and margin performance for Q2 2025, highlighting efficiency improvements Q2 Gross Profit and Margins | Metric | Q2 2025 | Q2 2024 | Change | Source | | :---------------- | :-------- | :-------- | :----- | :----- | | Gross Profit (USD) | $5.1M | $4.8M | +$0.3M | [9] | | Gross Margin | 25.8% | 23.9% | +1.9 pp | [9] | - Gross margin expanded by 185 basis points compared to Q2 2024, driven by mix and efficiency enhancements[4] Operating Expenses (SG&A) This subsection analyzes Usio's Selling, General, and Administrative expenses for Q2 2025, including key drivers and future outlook Q2 SG&A Expenses | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change | Source | | :------------- | :-------- | :-------- | :----- | :----- | | SG&A Expenses | $4.6M | $4.0M | +$0.6M | [10] | - The increase in SG&A was primarily due to several one-time expenses related to sponsorship and marketing events, insurance renewals, professional fees, and other one-time expense accruals[4][10] - SG&A expenses are expected to be significantly lower in the second half of the year, resulting in only a nominal increase for full-year 2025 compared to 2024[4][10] Net Income (Loss) and Adjusted EBITDA This subsection reviews Usio's net income (loss) and Adjusted EBITDA for Q2 2025, providing insights into profitability Q2 Net Income (Loss) and Adjusted EBITDA | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change | Source | | :-------------------- | :-------- | :-------- | :----- | :----- | | Operating (Loss) | ($0.4M) | ($0.2M) | Down | [11] | | Net Income (Loss) | ($0.4M) | $0.1M | Down | [11] | | (Loss) Per Share | ($0.01) | $0.00 | Down | [11] | | Adjusted EBITDA | $0.5M | $0.8M | Down | [4, 11] | - The net loss in Q2 2025 was approximately $0.4 million, compared to net income of $0.1 million in Q2 2024, with the prior year benefiting from a $0.3 million employee retention tax credit[11] Six Months Ended June 30, 2025 Financial Results For the first half of 2025, Usio's total revenues increased, driven by growth across most business lines except prepaid card services, with slight improvements in gross profit and margins, but increased SG&A expenses contributed to an operating loss and a net loss, while operating cash flow significantly improved Revenue Breakdown This subsection details Usio's revenue performance across its various business segments for the first half of 2025 H1 2025 Revenue by Segment | Segment | H1 2025 Revenue (USD) | H1 2024 Revenue (USD) | $ Change (USD) | % Change | Source | | :-------------------------------- | :-------------- | :-------------- | :------- | :------- | :----- | | ACH and complementary services | $10,236,741 | $7,776,064 | $2,460,677 | 32% | [9] | | Credit card | $14,923,724 | $14,822,002 | $101,722 | 1% | [9] | | Prepaid card services | $5,633,861 | $7,014,642 | ($1,380,781) | (20)% | [9] | | Output Solutions | $10,375,768 | $10,224,792 | $150,976 | 1% | [9] | | Total Revenue | $41,970,040 | $41,050,274 | $919,766 | 2% | [9, 12] | Gross Profit and Margins This subsection presents Usio's gross profit and margin performance for the first half of 2025, highlighting efficiency improvements H1 Gross Profit and Margins | Metric | H1 2025 | H1 2024 | Change | Source | | :---------------- | :-------- | :-------- | :----- | :----- | | Gross Profit (USD) | $9.9M | $9.7M | +$0.2M | [13] | | Gross Margin | 23.7% | 23.5% | +0.2 pp | [13] | Operating Expenses (SG&A) This subsection analyzes Usio's Selling, General, and Administrative expenses for the first half of 2025, including key drivers H1 SG&A Expenses | Metric | H1 2025 (USD) | H1 2024 (USD) | Change | Source | | :------------- | :-------- | :-------- | :----- | :----- | | SG&A Expenses | $8.8M | $8.1M | +9% | [14] | - The increase in SG&A was primarily related to several one-time expenses for sponsorship and marketing events, annual insurance renewals, professional fees, and franchise taxes[14] Net Income (Loss) and Adjusted EBITDA This subsection reviews Usio's net income (loss) and Adjusted EBITDA for the first half of 2025, providing insights into profitability H1 Net Income (Loss) and Adjusted EBITDA | Metric | H1 2025 (USD) | H1 2024 (USD) | Change | Source | | :-------------------- | :-------- | :-------- | :----- | :----- | | Operating (Loss) | ($0.6M) | ($0.5M) | Down | [15] | | Net Income (Loss) | ($0.6M) | ($0.2M) | Down | [15] | | (Loss) Per Share | ($0.02) | ($0.01) | Down | [15] | | Adjusted EBITDA | $1.17M | $1.59M | Down | [37] | - The net loss for H1 2025 was approximately $0.6 million, compared to a net loss of $0.2 million in H1 2024, primarily due to the absence of a $0.3 million employee retention tax credit received in the prior year[15] Operating Cash Flow and Financial Position This subsection details Usio's operating cash flow and overall financial position for the first half of 2025 H1 Operating Cash Flow and Cash Position | Metric | H1 2025 (USD) | H1 2024 (USD) | Change | Source | | :-------------------------- | :-------- | :-------- | :----- | :----- | | Operating Cash Flows | $1.1M | $0.5M | +$0.6M | [16] | | Cash and Cash Equivalents (as of June 30) | $7.5M | N/A | N/A | [16] | - The increase in operating cash flow was primarily driven by a reduction in accounts receivable[16] Business Outlook and Capital Management This section outlines Usio's revised revenue guidance and its strategic approach to capital deployment and potential M&A activities Revised Revenue Guidance Due to prolonged customer-caused implementation delays with two large national accounts, Usio has adjusted its full-year revenue guidance to 5–12% growth - Full-year revenue guidance adjusted to 5–12% growth, down from previous expectations, due to prolonged customer-caused implementation delays with two large national accounts[5] Capital Deployment and M&A Strategy Usio maintains a strong financial position and continues to strategically deploy capital, including over $700,000 in share repurchases year-to-date, while also preserving liquidity for potential merger and acquisition opportunities - Over $700,000 has been expended on share repurchases so far this year[5] - The company maintains sufficient liquidity to opportunistically capitalize on a more active merger and acquisition market to accelerate growth through acquisition[5] Corporate Information This section provides an overview of Usio, Inc., its business activities, and details regarding upcoming investor events and contact information About Usio, Inc. Usio, Inc. is a leading cloud-based FinTech company providing integrated electronic payment solutions, including credit, debit/prepaid, and ACH processing, as well as Output Solutions for electronic bill presentment and document services, headquartered in San Antonio, Texas - Usio, Inc. (Nasdaq: USIO) is a leading FinTech company operating a full stack of integrated, cloud-based electronic payment and embedded financial solutions[1][20] - The company offers a wide range of payment solutions to merchants, billers, banks, service bureaus, integrated software vendors, and card issuers[20] - Usio operates credit, debit/prepaid, and ACH payment processing platforms and provides electronic bill presentment, document composition, and printing/mailing services through its Usio Output Solutions division[20] Investor Events and Contact Usio has scheduled several upcoming investor events, including virtual and in-person conferences, and provided details for its Q2 2025 financial results conference call and webcast, along with investor relations contact information Upcoming Investor Events | Event Type | Date | Conference | Location | | :----------- | :----------- | :------------------------------------------ | :----------------------------------- | | Virtual | Aug 11–13 | Oppenheimer 28th Annual Technology, Internet & Communications Conference | Virtual | | In Person | Sep 8–10 | H.C. Wainwright 27th Annual Global Investment Conference | Lotte Hotel, New York, New York | | In Person | Oct 19–21 | LD Micro Main Event XIX | Hotel Del Coronado, San Diego, California | - Usio's management hosted a conference call on August 6, 2025, to review financial results and provide a business update, with replay available through August 20, 2025[18][19] - Investor Relations contact: Paul Manley, Senior Vice President, Investor Relations, paul.manley@usio.com, 612-834-1804[27] Non-GAAP Financial Measures This section defines Adjusted EBITDA as a key non-GAAP financial measure and provides its reconciliation to GAAP operating loss for Q2 and H1 2025 Definition and Reconciliation This section defines Adjusted EBITDA as a non-GAAP financial measure used by management to assess operating performance, excluding non-cash costs and non-recurring items, and provides a reconciliation of GAAP operating loss to Adjusted EBITDA for both the three and six months ended June 30, 2025 and 2024 - Adjusted EBITDA is a non-GAAP financial measure, defined as operating income (loss) before interest, taxes, depreciation, amortization of intangibles, non-cash stock option costs, and certain non-recurring items[22][25] - Management believes Adjusted EBITDA is helpful to investors in evaluating the Company's operating performance by excluding items not indicative of its results of operations[23] Reconciliation of GAAP Operating (Loss) to Adjusted EBITDA | Metric | Q2 2025 (USD) | Q2 2024 (USD) | H1 2025 (USD) | H1 2024 (USD) | Source | | :------------------------------------ | :-------- | :-------- | :-------- | :-------- | :----- | | Operating (loss) | ($396,970) | ($208,941) | ($636,554) | ($490,898) | [37] | | Depreciation and amortization | $464,599 | $547,849 | $960,369 | $1,124,003 | [37] | | EBITDA | $67,629 | $338,908 | $323,815 | $633,105 | [37] | | Non-cash stock-based compensation expense, net | $434,255 | $460,061 | $844,317 | $959,334 | [37] | | Adjusted EBITDA | $501,884 | $798,969 | $1,168,132 | $1,592,439 | [37] | | Adjusted EBITDA margins | 2.5% | 4.0% | 2.8% | 3.9% | [37] | Condensed Consolidated Financial Statements This section presents Usio's condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and changes in stockholders' equity Balance Sheets The condensed consolidated balance sheets provide a snapshot of Usio's financial position as of June 30, 2025, compared to December 31, 2024, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets Highlights | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | Source | | :-------------------------- | :-------------- | :---------------- | :----- | | Total Assets | $108,351,847 | $107,208,447 | [29] | | Total Liabilities | $89,618,996 | $88,051,484 | [29] | | Total Stockholders' Equity | $18,732,851 | $19,156,963 | [29] | | Cash and cash equivalents | $7,506,411 | $8,056,891 | [29] | Statements of Operations The condensed consolidated statements of operations present Usio's revenues, costs, and expenses, leading to operating income (loss) and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations Highlights | Metric | Q2 2025 (USD) | Q2 2024 (USD) | H1 2025 (USD) | H1 2024 (USD) | Source | | :-------------------------- | :-------- | :-------- | :-------- | :-------- | :----- | | Revenues | $19,960,990 | $20,079,888 | $41,970,040 | $41,050,274 | [31] | | Gross profit | $5,140,069 | $4,799,814 | $9,949,212 | $9,653,509 | [31] | | Operating (loss) | ($396,970) | ($208,941) | ($636,554) | ($490,898) | [31] | | Net income (loss) | ($366,654) | $75,492 | ($601,624) | ($174,696) | [31] | | Basic (Loss) Per Share | ($0.01) | $0.00 | ($0.02) | ($0.01) | [31] | Statements of Cash Flows The condensed consolidated statements of cash flows detail the cash generated and used by Usio's operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows Highlights | Metric | H1 2025 (USD) | H1 2024 (USD) | Source | | :------------------------------------ | :-------- | :-------- | :----- | | Net cash provided by operating activities | $1,110,326 | $457,772 | [33] | | Net cash (used in) investing activities | ($747,167) | ($455,057) | [33] | | Net cash provided by financing activities | $2,463,501 | $2,525,199 | [33] | | Change in cash, cash equivalents, etc. | $2,826,660 | $2,527,914 | [33] | Statements of Changes in Stockholders' Equity The consolidated statements of changes in stockholders' equity outline the movements in Usio's equity accounts, including common stock, additional paid-in capital, treasury stock, deferred compensation, and accumulated deficit, for the six months ended June 30, 2025 and 2024 Changes in Stockholders' Equity Highlights (H1 2025) | Metric | Balance at Dec 31, 2024 (USD) | Net (loss) for the period (USD) | Purchase of treasury stock costs (USD) | Balance at June 30, 2025 (USD) | Source | | :-------------------------- | :---------------------- | :------------------------ | :----------------------- | :----------------------- | :----- | | Total Stockholders' Equity | $19,156,963 | ($601,624) | ($708,298) | $18,732,851 | [29, 31, 34] | - The company repurchased treasury stock totaling $708,298 during the six months ended June 30, 2025[33][34] Disclaimers This section provides important disclaimers regarding forward-looking statements, outlining inherent risks and the company's policy on updating such information Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, highlighting that such statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, advising against undue reliance, and noting no obligation to update them - Forward-looking statements are identified by words such as 'believe,' 'should,' 'intend,' 'look forward,' 'anticipate,' 'schedule,' and 'expect'[26] - These statements are subject to certain risks and uncertainties inherent in the Company's business, including economic downturns, management of growth, loss of key resellers, relationships with networks and providers, security risks, stock price volatility, and the need for additional financing[26] - The Company assumes no obligation to update any forward-looking statements, except as required by law[26]